ABSTRACT
The events of 2007–2009 in the global financial markets clearly illustrated the need of an improved understanding of how the global Financial Services System (FSS) functions. In particular, the crisis made it clear that national FSSs, or components of such systems such as individual banks, were highly dependent on the normal functioning of other components of the global FSS. The primary goal of this chapter is to introduce a functional framework that enables a proactive identification of risk associated with outcomes of actions – either planned or already taken. Key concepts from Resilience Engineering and functional modelling are leveraged to define the approach. The primary goal of the proposed framework is to identify key functional dependencies between an individual firm’s business functions and the functions that drive key behaviours of global financial markets. The rapid demise of the UK-based residential mortgage firm Northern Rock is used to illustrate the proposed framework.
